Ancestry.com Inc. - Value

By: Zacks.com

Posted: 5/18/2012 1:00:00 AM

Referenced Stocks: ACOM

It's unusual for the fast growing Internet stocks to also be
value plays. But
Ancestry.com Inc.
(
ACOM
) is expected to have double digit earnings growth in 2012 and 2013
and this Zacks #2 Rank (Buy) has a forward P/E of 14.

Ancestry.com operates the world's largest online family history
resource web site with 1.9 million paying subscribers. The company
has 10 billion records.

Its users have created more than 34 million family trees with about
4 billion profiles.

Stock Plunged After NBC Cancelled TV Show

On May 13, NBC announced it would not renew "Who Do You Think You
Are?" for a fourth season. The show follows celebrities as they
search for their family history, often using Ancestry.com's site
along the way.

It was a great promo for those interested in finding their own
family history.

Investors sold off shares on the news, although Ancestry.com said,
in a press release, that it was exploring other distribution
options.

Shares Are a Value

With the recent sell-off, Ancestry.com has gotten even cheaper.

In addition to a P/E under 15, which is the cut-off I use for
value, it also has a price-to-book ratio just on the edge of value
at 3.0. A P/B under 3.0 usually indicates value.

Investors also get other solid metrics, including a 1-year return
on equity of (ROE) of 21%.

Ancestry.com Continued Its Earnings Surprise Streak In
Q1

Ancestry.com is more than just a value stock, however. On Apr 25,
the company reported its first quarter results and surprised on the
Zacks Consensus for the 10th time in a row.

Ancestry.com has put together quite an earnings surprise streak. It
has not missed since it went public in 2009.

Earnings per share were 30 cents easily crushing the Zacks
Consensus by 30%.

Revenue rose 19% to $108.5 million from $91 million a year ago as
revenue rose 22% at the company's core Ancestry.com website.

It also saw the number of subscribers, a key metric for a company
like this, rise 16% to 1.87 million versus a year ago. Subscribers
were also 10% higher than the fourth quarter.

Analysts Bullish About 2012

The first quarter was especially strong as interest in family
history has grown. The much-anticipated 1940 census was released in
April, which also spurred strong demand for more information.

Ancestry said it benefitted in the quarter from its 1930 census
promotion which piggybacked on the excitement about the 1940
release.

5 out of 7 estimates for 2012 moved higher in the last 30 days
pushing the 2012 Zacks Consensus Estimate up about 1% to $1.62 per
share.

That is earnings growth of 25% over 2011 when the company made just
$1.29.

Analysts expect the growth to continue, with 2013 earnings forecast
to rise another 22%.

The recent sell off in the shares has created a buying opportunity.
This is a chance for investors to get a fast growing Internet stock
at attractive valuations.

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Tracey Ryniec is the Value Stock Strategist for
Zacks.com
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
@TraceyRyniec
.